Sports Law Spring Outline of Classic Texbook Cases Part 2

Baseball is interstate commerce & is subject to NLRB jurisdiction (thus overruling the Supreme Ct. in a sense Flood)

board can decline jurisdiction if the dispute doesn’t have a major impact on commerce

board exerted jurisdiction here

baseball’s internal regulation is not sufficient to prevent labor disputes, the 3rd party in arbitration isn’t neutral

labor disputes will be national in scope

umpires are not supervisors

Dissent:

Congress’s silence on the issue of covering baseball in NLRA should be taken to mean that jurisdiction should not be asserted

No showing that jurisdiction is needed

Section 8(a)(3) - Discrimination on the Basis of Union Activity or Membership

NLRB v. Transportation Management Corp (1983) p.4-9

bus driver fired for attempting to organize a union; reason given for firing was he left his keys in the bus and took unauthorized breaks (pretextual reasons)

Court applied the Wright line Analysis:

General Counsel (of NLRB, who brings suit) carries the burden of persuading the Board that an anti-union animus contributed to the employer’s decision to fire an employee

burden does not shift, but the employer, could avoid the finding of a violation by demonstrating by a preponderance of the evidence that the worker would have been fired even if he had not been involved with the Union. (affirmative defense)

Ct held that the evidence was not sufficient to show that P would have been discharged despite his efforts to organize a union.

Test for determining is discrimination is based on union activity:

Wright Line analysis à places burden on employer to prove discharge would have occurred had the forbidden motive not been present

preponderance of the evidence standard (>50%)

some states have not adopted this rule because the Act directs that the Board’s atty. has the burden of proving violations

*Why is who has the burden important?

What if the evidence for either side cancels each other out?

In civil actions P has burden of proof (preponderance) once burden is met it shifts to D

*Balance:

Don’t want someone to get fired for Union activities?

Don’t want an employee or employer to do what ever they want (Carte blanc) and not get fired.

Nordstrom v. NLRB (4-13)

Wright Line created a causation test in all cases alleging employee being fired based on union activities that turn on employer motivation.

First, we shall require that the General Counsel make a prima facie showing sufficient to support the inference that protected conduct was a motivating factor in the employer’s decision. Once this is established, the burden will shift to the employer to demonstrate that the same action would have taken place even in the absence of the protected conduct.

To establish an unfair labor practice the General Counsel need show by a preponderance of the evidence only that a discharge is in any way motivated by a desire to frustrate union activity.

The elements of protected activity on the part of the discharged employee, employer knowledge of the protected activity, and employer animus toward the Union, taken together, are sufficient to establish a prima facie case of unlawful discharge.

Duty to BargainAppropriate Bargaining Unit

NASL v. NLRB (1980) p.4-48

Issue 1: Was there a Joint employer relationship? Yes

existence of a joint employer relationship depends on the control which one employer exercises, or potentially exercises over the labor relations policy of the other.

Held the league exercises a significant degree of control over essential aspects of the clubs’ labor relations.

Miller says could argue not a joint enterprise bcse teams compete against each other

Held that with an integrated group with common labor problems & a high degree of centralized control over labor relations a league-wide unit is reasonable

The Principle of Exclusivity and the Duty to Bargain

Morio v. NASL (1980) p.4-51

secret elections held to create union

NASL refused to bargain w/union & admitted it

Held: the parts of the agreement made after the establishment of the union void

Void - Doesn’t exist

Voidable - leaves an option open to void

Powerful remedy because it gave the players a choice

Ct. also granted a temporary injunction. Why? To prevent the possibility of exacerbated harm

NOTE: Sports are unique because CBA & individual Ks co-exist.

disparity between players ability is great & therefore compensation must be different

different from mechanics fixing a car

The Subject Matter of Collective Bargaining

Mandatory - wages, hours or other terms & conditions of employment

Not Mandatory - 1) those that concern ER-3rd party relations that are outside the scope of union concerns; 2) those that deal w/ union-EE relations which are regarded as being outside the scope of legitimate management concern & 3) those matters which center on managerial decisions which lie at the core of entrepreneurial control

NFLPA v. NLRB (1974) p.4-57 Issue: Did NLRB err in dismissing complaint on the ground that rule was adopted by Commsnr rather than ERs?

It was a no fighting rule that imposed a $200 fine

Some players were fined as a result of the rule, but players were unaware of the rule

fair competition is good; Sherman Act is designed to protect fair competition

A business monopoly is a business monopoly no matter whether union is involved or not

Held: Finding no purpose of Congress to immunize labor unions who aid and abet manufacturers and traders in violating the Sherman Act, the respondent violated the Act. The same labor union activities may or may not be in violation of the Act, dependent upon whether the union acts alone or in combination w/ business groups.

Amalgamated Meat Cutters v. Jewel Tea Company (1965) p.5-9

Butcher’s union sets hours for market times (9-6)

Union’s not acting w/ the intent to hurt other people

consumer is getting burned by not having longer hours

Jewel came up/w a better way of handling meat & more convenient, but it was shot down

Marketing hours are mandatory and must be bargained for

Union-employer agreements are beyond the reach of the Sherman Act

Difference between this case and Bradley case is intent

If intent of action is primarily anticompetitive à not allowed

If anticompetitive effect is ancillary to purpose à lawful activity

Butcher’s purpose was to work fewer hours

United Mine Workers of America v. Pennington (1965) p.5-13

UMW sued to recover $55K alleged to be due to a retirement fund

P argued conspiracy to get small coal producers out of the market

D cross-claimed for antitrust violations

D argued wage standards, therefore exempt from Sherman Act

Ct said union may make wage agreement w/ multi-employer bargaining unit & may seek to obtain same terms from other employers, but can’t conspire to impose wages on other bargaining units

Overproduction is not a good free market argument because you are tampering w/ a system by unnaturally taking away jobs & affecting supply & demand (higher wages; less workers)

Unions are inherently designed to eliminate activity (CBAs are exempt from antitrust)

History shows a consistent congressional purpose to limit severely judicial intervention in collective bargaining under cover of the wide umbrella of the antitrust laws, &, rather to deal w/ what Congress deemed to be specific abuses on the part of labor unions by specific proscriptions in the labor statutes.

the labor policy favoring collective bargaining may potentially be given pre-eminence over the antitrust laws where the restraint on trade primarily affects only the parties to the CBA

Federal labor policy is implicated sufficiently to prevail only where the agreement sought to be exempted concerns a mandatory subject of bargaining

The policy favoring collective bargaining is furthered to the degree necessary to override the antitrust laws only where the agreement sought to be exempted is the product of bona fide arm’s length bargaining

Ct. says this is true on its face, but is was agreed upon through the CBA

P contends he isn’t achieving full market value because he is being capped

Ct. says this is common in the industry

Wood says he wasn’t around when the CBA was signed so he shouldn’t be bound by it.

Court says “tough,” that’s the way unions work.

Key Questionà should CBA be honored or should P be able to backdoor the agreement *Professional sports are unique because players bargain for their own wages, whereas normally unions bargain for members wages

VI. Amateur Athletics

Amateur Status – The Right to Play

Oldfield v. The Athletic Congress (1985) p. 6-2

P was amateur, went pro & wanted to return to amateur to compete in Olympics

Issue: Was there a private cause of action? No. 4 Factors for determining if statute contains an implied cause of action:

whether P is a member of a class for whose special benefit the statute was enacted

whether there is an indication of Congress’s intent to create or deny a private remedy

whether a private remedy would be consistent w/ the statute’s underlying purposes

whether the cause of action traditionally is relegated to state law

OK Secondary School Activities Assn v. Midget (1972) p. 6-10

Courts shouldn’t interfere with unincorporated associations in their efforts to discipline voluntary members

P argues NCAA was a state actor; NCAA is so powerful that UNLV had no other choice

Ct said how can they be joint actors if their interests are diametrically opposed

NCAA not a state actor because they enjoyed no governmental powers to facilitate their investigation

NCAA could not directly discipline any UNLV employee or Tarkanian

UNLV operated its athletic program under the color of NCAA regulations, NCAA did not operate under color of state scheme.

UNLV could have withdrawn from NCAA if it did not want to follow NCAA’s suggestions

Dissent: the nature of the investigations was a violation of Tarkanian’s due process rights

NCAA and UNLV acted jointly in suspending Tarkanian

UNLV agreed that findings of fact at NCAA hearing would be binding on UNLV

State Action: Case typically involves the state delegating power to a 3rd party

Louisiana High School Athletic Assn v.St. Augustine High School (1968) p.6-26

St. Augustine wants to join Athletic Assn

they are a public, minority school & the Assn is a private organization so they feel they can discriminate

Ct. said not private org. because 85% of members are public schools; funded by public funds, therefore state actor

Private organization that ran public school athletics was a state actor

Brand v. Sheldon Community School (1987) p. 6-28

There is a property interest in a college athletic scholarship, but not in a mere expectancy

issue is whether P is entitled to participate or has a mere expectancy to participate

P is a wrestling student declared ineligible to participate due to sexual activity

cts have generally held there is no entitlement to participate in school sports

all rules were followed & P received all process due him

Substantive due process rights are violated only if Board’s decision was arbitrary and capricious.

ct said board’s decision was not arbitrary & no right to privacy was violated

Brand argued that he received a more harsh sentence than previous violators

Court said it would not go back and look at previous cases and deconstruct them and look at their facts to decide this argument

the Due Process Clause does not require courtroom standards of evidence to be used in administrative hearings

The Great Gender Debate

Cohen v. Brown University (1996) p. 6-41

Brown demoted men’s programs to gain equity between men’s and women’s programs to comply with Title IX

Title IX requires some type of equity between men’s and women’s programs

Was permissible for Brown to cut programs in order to meet with Title IX requirements

Compliance with Title IX may be achieved in a number of ways:

Eliminate athletic program altogether

Elevate or create requisite number of women’s programs

Demote or eliminate requisite number of men’s programs

Combination of these remedies

Court states that it gives universities as much freedom as possible in conducting their operations consonant with constitutional and statutory limits.

Sports Agents

Agents can get paid as the player gets paid

If player doesn’t get paid, agent doesn’t get paid

Agents get commission on signing bonuses, as they are considered salary

Zinn v. Parish (7-2)

Agent negotiated a three-year deal for player. After he did that player released him and refused to pay him his commission for the three years.

Court ruled for agent and he got his commission

Standard to prove negligence by agent is what would reasonable agent have done in similar situation.

Hard standard to prove negligence under

Agent makes so many decisions it’s hard to 2nd guess them

Fraud and intentional misrepresentation are easier to show

Brown v. Woolf (7-5)

Agent talked player into signing with a new team for a lot of money, but team failed.

Player didn’t get his money but agent got full commission from team.

Player sued for constructive trust on money that agent got

General rule is that in cases of constructive fraud punitive damages are available.

Constructive fraud is characterized as acts or a course of conduct from which an unconscionable advantage is or may be derived or a breach or confidence coupled with an unjust enrichment which shocks the conscience, or a breach of duty, including mistake, duress or undue influence, which the law declares fraudulent because of a tendency to deceive, injure the public interest or violate the public or private trust.

Another formulization is where the dominant party in a fiduciary relationship makes a false statement which the other party relies on to their detriment.

Dominant party doesn’t need to know it is false.

Not so in MD à no punitives allowed

Have to show actual malice for punitive damage award in MD

Detroit Lions & Billy Simms v. Argovitz (7-7)

Argovitz was Sims’ agent and was negotiating K with Lions

Argovitz started really high and then was negotiating down, almost to an agreement

Argovitz then suggested that Sims should speak to the Houston Gamblers

Argovitz owned a large stake in Gamblers, but did not disclose that

Lions made an offer to Sims, which was relayed by Argovitz, which was lower than he thought it should be and upset him

Sims signed with Houston and told Argovitz not to call Lions back.

The relationship between a principal and an agent is fiduciary in nature, and as such imposes a duty of loyalty, good faith, and fair and honest dealing by the agent

Because of egregious breach of Argovitz’s fiduciary duty, the proper remedy was recission of the contract.

Walters v. Fullwood (7-11)

Parties to a K can specify which law is going to apply to the K

K in MD can be governed by DE law

Intentional interference with K

Plaintiff must allege:

The existence of a valid K between plaintiff and another contracting party;

Defendant’s knowledge of that K;

Defendant’s intentional procurement of a breach of that contract by the other party; and

Damages

Such a claim requires that the defendant’s sole motive was to inflict injury and that the defendant employed unlawful

There can be no interference with a K at will

Services and fees are already paid

Agent offering and player signing K before player’s graduation was not illegal in this case but it was against public policy so the court wouldn’t enforce the K.

In some states it is illegal for this to occur

Agent bears the brunt of the K being declared void as he was more experienced and was richer.

Salary Cap

Cap and cash figures are very different

Cap number is a percentage of Defined Gross Revenues (DGR)

DGR includes

TV revenues (Bulk)

Radio revenues

Gate receipts

DGR is divided by # of teams then multiplied by the percentage the NFL comes up with (currently 68%) and that is the cap figure

$1M/day fine for each day a team is over the cap

Example below is for a four year deal with $8M signing bonus

Year

Salary for Year

Cash

Cap

2001

$500,000

$8.5M

$2.5M

2002

$1M

$1M

$3M

2003

$1M

$1M

$3M

2004

$2M

$2M

$4M

In the event that a player is released before the end of K:

If released prior to June 1st:

Team takes the charge for the remaining signing bonus left on K on the salary cap number for that year

If released after June 1st

Team has option to spread the remaining money left on signing bonus out over two years, or take it all in current year

If player is traded the trading team is still responsible for the signing bonus on their cap

Most NFL teams would rather take the cap hit in one year instead of spreading it out

Incentives:

Two types: Likely to be earned and Unlikely to be earned

Likely to be earned is where a running back is promised $100K if he rushes for 1000 yards and he rushed for that or more last season

Likely to be earned are charged to the salary cap when negotiated

If player doesn’t earn it the team gets a credit the next year

Unlikely to be earned is where a running back is promised $100K if he rushes for 1000 yards and last year he rushed for 999 yds. or less.

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